Federal International (2000) (BDU) H1 2023 earnings summary

Executive summary

• H1 revenue fell 68.5% YoY to S$28.7m after completion of the PT Gunanusa Utama Fabricators project in FY2022; higher Thailand trading sales partly offset lower Indonesia sales.

• Profit after tax was S$1.7m, down 30.6% YoY; owners recorded a S$3.7m loss while non-controlling interests recorded S$5.4m profit, including a S$5.5m gain from intercompany debt waivers.

Financial highlights

• Gross profit fell 31.9% YoY to S$7.9m, while gross margin rose to 27.6% from 12.7%, reflecting the lower-margin PTG project in H1 2022.

• Profit before tax declined 26.1% YoY to S$2.0m; finance costs fell to S$456k from S$672k and a S$32k net impairment writeback replaced a S$478k net impairment loss.

• Other operating expenses declined to S$265k from S$1.8m, mainly due to no repeat of the prior-year subsidiary disposal loss and lower vessel-related expenses and inventory allowances.

• Operating cash flow was S$3.0m; investing activities generated S$22.4m, while financing activities used S$26.1m, leaving cash and cash equivalents of S$6.8m, excluding pledged balances.

Outlook and guidance

• Oil and gas activity is expected to remain resilient despite conflicting indicators clouding the oil-price outlook; projects in the pipeline are progressing with strategic partners.

• Expected 30% direct interest in PTG, following settlement of the loan to Pak Azmil Rahman with shares, is intended to expand involvement in PTG’s offshore and onshore fabrication business.